Enhancing Energy Price Formation for Improved Market Efficiency
"Explore the SIR271.WWE.MKT1.4.SPP initiative by Southwest Power Pool to address transmission constraint violations during extreme weather events. Learn about potential benefits, risks, and impacts on market efficiency and reliability."
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Presentation Transcript
SIR271 WWE MKT1.4 SPP 10/26/2021 Helping our members work together to keep the lights on... today and in the future. SPPorg southwest-power-pool SouthwestPowerPool
SIR271 WWE MKT1.4 SPP Purpose: During the 2021 winter weather event SPP observed instances where transmission constraint violations were occurring due to energy offer prices being far above the VRL price. Energy prices offered above the highest VRL price can overpower the cost to re-dispatch around transmission constraint which leads to these violations. The current VRL prices were set based on analysis using the FERC approved $1,000 energy offer cap. However, during the 2021 winter weather event or other emergency conditions when energy offers are greater than $1,000 these VRL prices may not be appropriate. Potential Benefit: More accurate price formation during Emergency conditions; Enhanced re-dispatch capabilities during Emergency conditions; Known Risks Determining appropriate values will require significant analysis; Dynamic VRLs contingent upon system conditions significantly increases the complexity of the Market solution; Current VRLs are statically defined in the Tariff and will take creativity to implement in governing documents; Alignment with existing SIR 267, 269, 270, 271, 323, 326, 327, 328, 329, 340 2
SIR271 WWE MKT1.4 SPP Potential System / Process Impacts API/MUI, MCE, MDB, DA, RTBM Potential MCE Performance Impact High Potential Complexity Design: High Implementation: High Market Philosophy Impacts: Market Efficiency, Market Reliability, Price Formation, Price Convergence, Market Market Efficiency, Market Reliability, Price Formation, Price Convergence, Market Transparency Transparency 3
SIR271 WWE MKT1.4 SPP Potential Value Add WWE Initiative WWE Initiative 4
